Shoppers walk along a shopping street in Beijing, China. Optimists could point to
China bulls and bears called it a draw in the end. Economic growth
came in faster than estimated at 7.4 percent for last year, and that
was still the ..........................slowest since 1990. Good news or bad news? Your call.
That’s the beauty of economic reports: there’s something in them for everyone.
Is China heading for the dreaded hard landing, adjusting to a “new normal” of slower yet higher-quality growth, or about to roar ahead again under the steroids of renewed monetary stimulus?
Optimists could point to faster-than-estimated growth in industrial output and retail sales in December, a sign of gathering momentum after November’s interest rate cut. Don’t get too excited. Quarter-on-quarter growth slowed to an annualized 6.1 percent from 7.8 percent.
That’s if you take the numbers at face value to begin with, which most analysts don’t. Like laws and sausages, those who like economic statistics are probably better off not seeing how they’re made.
Many China analysts track real activity indicators such as electricity, steel and cement output that may be more reliable. These improved slightly from “very low levels,” Bloomberg’s Beijing-based economist Tom Orlik writes, consistent with the story of a modest upswing.
At any rate, then, doom has been postponed.
Former U.S. Treasury Secretary Larry Summers has been among those ringing the doom bell recently, writing with fellow Harvard University professor Lant Pritchett in a paper last year that China is likely to face a “discontinuous decline in growth.” Shortly after yesterday’s GDP report, the IMF got in on the act, cutting its forecast for China’s growth this year by 0.3 of a percentage point to 6.8 percent.
Of course, if the hard landing does arrive, the GDP figures are the last place we’ll see it. What happens to property sales and prices, debt levels, money-market rates and bond spreads will have much more to tell.
It could be quite a year. Interesting times, as always, are guaranteed.
***
The Bank of Japan issues a monetary policy statement around lunchtime today, followed by a press conference by Governor Kuroda at about 2:30 p.m. Hong Kong time. Malaysia posts inflation data at midday. Australian consumer confidence data are due at 7:30 a.m. A short while ago, New Zealand reported consumer prices fell for the first time in two years in the fourth quarter.
Earnings in Asia include Singapore Exchange and Keppel Land in Singapore, Krung Thai Bank in Thailand, and ITC and Zee Entertainment of India. BHP Billiton recently reported second-quarter iron ore output of 56.35 million tons, versus a median estimate of 58 million tons.
***
U.S. stocks held tough as markets reopened after the Martin Luther King Jr. Day holiday, with the Standard & Poor’s (SPX) 500 Index recovering from an early 0.7 percent drop to end the session up less than 0.2 percent. There was no obvious catalyst for the reversal as oil remained lower all day, closing down 4.7 percent at $46.39 a barrel in New York, about 50 cents above the five-year low set last week. The S&P 500 trimmed its 2015 drop to about 1.8 percent.
Technology stocks led the way higher, rising 0.8 percent as a group. Netflix Inc. stole the show in after-hours trading as the video-rental service rallied 15 percent to almost $400 a share after fourth-quarter subscriber growth topped forecasts. The company also said it plans to offer Sony Corp.’s controversial comedy “The Interview” to subscribers in the U.S. and Canada, which makes you wonder if we’ll all get to read CEO Reed Hastings’ emails soon.
***
- In the U.S., President Obama gives his State of the Union address at 10 a.m. Hong Kong time - Abe cuts short Middle East visit after Islamic State militants threaten to kill hostages - AirAsia crash jet stalled after climbing too fast - Morgan Stanley misses estimates, IBM beat - Dalian Wanda to buy stake in Atletico Madrid - “The big move, it’s what kills you.” Prophetic words - Li Ka-shing broadens European spending spree - Wall Street banks plan to sell derivatives in Asia via a Hotels.com-type collaborative website - Rebels seize Yemen palace - Ukraine accuses Russian troops of joining separatists - KKR said to seek as much as $3 billion for distressed fund to invest in oil, Asia - Li Keqiang heads for Davos as world frets over China growth - Why oil’s slump won’t deter China’s sea claims - China’s stock boom boosts derivatives revenue for Singapore - Microsoft gave FBI Charlie Hebdo data in 45 minutes - Conspiracy theories mount in death of Argentine prosecutor -Xi Jinping earns a fraction of counterparts, even after a 62 percent pay rise - More than 10,000 Cameroonians flee border after Boko Haram attacks - Six Taiwan firefighters killed in bowling alley roof collapse - Where Asian billionaires went wrong with soccer - Djokovic, Wawrinka reach second round at Australian Open
***
Hong Kong Monetary Authority Chairman Norman Chan’s speech on internationalization of the renminbi was sparsely attended at the Asian Financial Forum yesterday.
A UBS investor event, chocolate cakes and a display racing car were among the competing attractions. Tough choice, and the growing global role of China’s currency is an important, important subject, but we kind of know where we would have been.
If Chan needs any advice on how to drum up attention, he could give Thomas Jordan a call: just announce that Hong Kong is getting rid of the dollar peg and that cavernous convention venue would be packed to the rafters in a jiffy.
On second thoughts, don’t do that. We prefer our central bankers staid and predictable.
***
Midweek is always a good time to sit back, take stock and survey the disaster of last weekend’s fantasy football picks (12th and falling in Bloomberg’s unofficial Asia league. Oh Eden! Oh Wayne!)
The Premier League calculus has changed again ahead of the potential clash of the season between leaders Chelsea and second-placed Manchester City on Jan. 31, after the latter’s unexpected capitulation to Arsenal on Sunday.
Who saw that coming? Arsenal, cannon fodder away from home for the Premier League heavyweights, suddenly grew a backbone, keeping a clean sheet to leave the Etihad with a 2-0 victory. We can’t remember the last time Arsenal won away at a championship contender, though we do remember some of last year’s horror shows: a 6-3 drubbing in the corresponding fixture at City, 6-0 at Chelsea (in Arsene Wenger’s 1,000th game in charge) and that unforgettable 5-1 defeat at Liverpool -- the game that, had it been a boxing match, would have been stopped by the referee in the 19th minute.
Until Sunday, City had been looking ominous. Missing key players, the champions continued to pick up points through December and looked set to overhaul a stuttering Chelsea. They all but did. On Jan. 1, City were behind the leaders by one letter: same points, same goal difference, same number of goals scored. C comes before M, though, and Chelsea stayed top on alphabetical order.
Now the gap is back to five points, after Chelsea’s 5-0 cakewalk at Swansea on Saturday. That’s where they’ll be when City come to Stamford Bridge (the Premier League takes a break this weekend for the F.A. Cup.) While Chelsea have the momentum again, it’s a tough match to call. One prediction we will make: Chelsea fans will have very, very sweaty hands if Frank Lampard comes off the bench late on with the game still in the balance.
To contact the reporter on this story: Matthew Brooker in Hong Kong at mbrooker1@bloomberg.net
To contact the editors responsible for this story: Marty Schenker at mschenker@bloomberg.net Edward Johnson, Greg Ahlstrand
That’s the beauty of economic reports: there’s something in them for everyone.
Is China heading for the dreaded hard landing, adjusting to a “new normal” of slower yet higher-quality growth, or about to roar ahead again under the steroids of renewed monetary stimulus?
Optimists could point to faster-than-estimated growth in industrial output and retail sales in December, a sign of gathering momentum after November’s interest rate cut. Don’t get too excited. Quarter-on-quarter growth slowed to an annualized 6.1 percent from 7.8 percent.
That’s if you take the numbers at face value to begin with, which most analysts don’t. Like laws and sausages, those who like economic statistics are probably better off not seeing how they’re made.
Many China analysts track real activity indicators such as electricity, steel and cement output that may be more reliable. These improved slightly from “very low levels,” Bloomberg’s Beijing-based economist Tom Orlik writes, consistent with the story of a modest upswing.
At any rate, then, doom has been postponed.
Former U.S. Treasury Secretary Larry Summers has been among those ringing the doom bell recently, writing with fellow Harvard University professor Lant Pritchett in a paper last year that China is likely to face a “discontinuous decline in growth.” Shortly after yesterday’s GDP report, the IMF got in on the act, cutting its forecast for China’s growth this year by 0.3 of a percentage point to 6.8 percent.
Of course, if the hard landing does arrive, the GDP figures are the last place we’ll see it. What happens to property sales and prices, debt levels, money-market rates and bond spreads will have much more to tell.
It could be quite a year. Interesting times, as always, are guaranteed.
***
The Bank of Japan issues a monetary policy statement around lunchtime today, followed by a press conference by Governor Kuroda at about 2:30 p.m. Hong Kong time. Malaysia posts inflation data at midday. Australian consumer confidence data are due at 7:30 a.m. A short while ago, New Zealand reported consumer prices fell for the first time in two years in the fourth quarter.
Earnings in Asia include Singapore Exchange and Keppel Land in Singapore, Krung Thai Bank in Thailand, and ITC and Zee Entertainment of India. BHP Billiton recently reported second-quarter iron ore output of 56.35 million tons, versus a median estimate of 58 million tons.
***
U.S. stocks held tough as markets reopened after the Martin Luther King Jr. Day holiday, with the Standard & Poor’s (SPX) 500 Index recovering from an early 0.7 percent drop to end the session up less than 0.2 percent. There was no obvious catalyst for the reversal as oil remained lower all day, closing down 4.7 percent at $46.39 a barrel in New York, about 50 cents above the five-year low set last week. The S&P 500 trimmed its 2015 drop to about 1.8 percent.
Technology stocks led the way higher, rising 0.8 percent as a group. Netflix Inc. stole the show in after-hours trading as the video-rental service rallied 15 percent to almost $400 a share after fourth-quarter subscriber growth topped forecasts. The company also said it plans to offer Sony Corp.’s controversial comedy “The Interview” to subscribers in the U.S. and Canada, which makes you wonder if we’ll all get to read CEO Reed Hastings’ emails soon.
***
- In the U.S., President Obama gives his State of the Union address at 10 a.m. Hong Kong time - Abe cuts short Middle East visit after Islamic State militants threaten to kill hostages - AirAsia crash jet stalled after climbing too fast - Morgan Stanley misses estimates, IBM beat - Dalian Wanda to buy stake in Atletico Madrid - “The big move, it’s what kills you.” Prophetic words - Li Ka-shing broadens European spending spree - Wall Street banks plan to sell derivatives in Asia via a Hotels.com-type collaborative website - Rebels seize Yemen palace - Ukraine accuses Russian troops of joining separatists - KKR said to seek as much as $3 billion for distressed fund to invest in oil, Asia - Li Keqiang heads for Davos as world frets over China growth - Why oil’s slump won’t deter China’s sea claims - China’s stock boom boosts derivatives revenue for Singapore - Microsoft gave FBI Charlie Hebdo data in 45 minutes - Conspiracy theories mount in death of Argentine prosecutor -Xi Jinping earns a fraction of counterparts, even after a 62 percent pay rise - More than 10,000 Cameroonians flee border after Boko Haram attacks - Six Taiwan firefighters killed in bowling alley roof collapse - Where Asian billionaires went wrong with soccer - Djokovic, Wawrinka reach second round at Australian Open
***
Hong Kong Monetary Authority Chairman Norman Chan’s speech on internationalization of the renminbi was sparsely attended at the Asian Financial Forum yesterday.
A UBS investor event, chocolate cakes and a display racing car were among the competing attractions. Tough choice, and the growing global role of China’s currency is an important, important subject, but we kind of know where we would have been.
If Chan needs any advice on how to drum up attention, he could give Thomas Jordan a call: just announce that Hong Kong is getting rid of the dollar peg and that cavernous convention venue would be packed to the rafters in a jiffy.
On second thoughts, don’t do that. We prefer our central bankers staid and predictable.
***
Midweek is always a good time to sit back, take stock and survey the disaster of last weekend’s fantasy football picks (12th and falling in Bloomberg’s unofficial Asia league. Oh Eden! Oh Wayne!)
The Premier League calculus has changed again ahead of the potential clash of the season between leaders Chelsea and second-placed Manchester City on Jan. 31, after the latter’s unexpected capitulation to Arsenal on Sunday.
Who saw that coming? Arsenal, cannon fodder away from home for the Premier League heavyweights, suddenly grew a backbone, keeping a clean sheet to leave the Etihad with a 2-0 victory. We can’t remember the last time Arsenal won away at a championship contender, though we do remember some of last year’s horror shows: a 6-3 drubbing in the corresponding fixture at City, 6-0 at Chelsea (in Arsene Wenger’s 1,000th game in charge) and that unforgettable 5-1 defeat at Liverpool -- the game that, had it been a boxing match, would have been stopped by the referee in the 19th minute.
Until Sunday, City had been looking ominous. Missing key players, the champions continued to pick up points through December and looked set to overhaul a stuttering Chelsea. They all but did. On Jan. 1, City were behind the leaders by one letter: same points, same goal difference, same number of goals scored. C comes before M, though, and Chelsea stayed top on alphabetical order.
Now the gap is back to five points, after Chelsea’s 5-0 cakewalk at Swansea on Saturday. That’s where they’ll be when City come to Stamford Bridge (the Premier League takes a break this weekend for the F.A. Cup.) While Chelsea have the momentum again, it’s a tough match to call. One prediction we will make: Chelsea fans will have very, very sweaty hands if Frank Lampard comes off the bench late on with the game still in the balance.
To contact the reporter on this story: Matthew Brooker in Hong Kong at mbrooker1@bloomberg.net
To contact the editors responsible for this story: Marty Schenker at mschenker@bloomberg.net Edward Johnson, Greg Ahlstrand
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